How relationship banking is changing the industry to the advantage of small businesses

Seventy-five percent of small businesses have expressed that their financial institution doesn’t effectively understand their needs. As a result of this dissatisfaction, the banking industry is moving to more of a relationship manager model to service the small business segment.

“Banks are hiring full-time relationship managers who have a number of small businesses that they call on,” says Gary Wright, senior vice president, small business banking executive, at Cadence Bank. “These relationship managers offer expertise in the ‘business’ of small business, and also bring an understanding of particular segments and industries that can be extremely effective in identifying the right solutions to meet a small business’s financial goals.”

You, as a small business owner, have a person to call on if you have an issue — rather than an 800 number — and that banker knows who you are and is informed about the issues impacting your business, he says.

Smart Business spoke with Wright about choosing a bank and how relationship banking can give business owners the best service for their financial needs now and in the future.

As you begin to shop for a financial institution, what should you consider first?

First, you need to give thought to why you need a bank in the first place. Are you looking for deposit services? Do you need cash management solutions? Are you looking for loans or sound advice regarding what it takes to qualify for a loan or a loan that best fits your needs? While it’s important to evaluate a bank’s pricing or incentives, also think about the overall banking relationship that the bank is offering.

Look for a bank that can grow with you as your business progresses. You may only need a business checking account today, but what might your business need in the next five to 10 years? Think long term — approach the decision as you would consider any long-term investment. Do research to find a bank that is fiscally sound and will be around long term, as the industry deals with increased costly regulations.

Size is important, too, especially when it comes to lending. Regional banks generally can offer you more competitive rates compared with local community banks, as well as less bureaucracy and more personalized service than larger institutions. Regional banks often offer the advantage of online banking and treasury management services that can help increase your company’s efficiency.

How can businesses benefit from banks that are relationship focused?

Relationship-focused banks are concerned with building relationships with small business customers by focusing on the long term and incorporating forward-thinking strategy. Their bankers take an interest in you and your business. They want to know how you got started and about the successes and challenges that led you to where you are. They really dig deep into the nuts and bolts of your company to learn your business and financial operations so they can offer solutions that are specific to your needs.

With a relationship focus, there’s greater accessibility. Working with a bank that knows you and your business can speed up problem solving, for example, as the bank already knows your company and can easily inform you about the different options that are available. The bank can match the solution to the need, rather than just pushing a product. That’s the whole point of building a relationship with the small business.

As a business owner, you may often be on the go and require banking services that allow you to bank 24/7, wherever you are. What sort of solutions should you look for?

Technology is one of the fastest-growing areas in banking. You should consider a bank that is committed to technology, such as:

• Online banking that provides businesses with access to business online banking and treasury solutions.

• Mobile banking. As the number of smartphone users grows, coupled with the countless demands small business owners face daily, mobile banking is increasingly becoming a necessity. Many banks offer mobile banking apps and specially designed mobile sites that allow small business customers to access online banking services using smartphones or tablets.

• Text banking, where you can text your request and receive details on your account almost instantly. You also can transfer funds from one account to another via text.

How does the bank provide cash management solutions that take into account a small business consumer’s needs?

Generally, treasury management solutions cater to larger commercial businesses, but many of these services are increasingly in demand by smaller businesses. Treasury management solutions now are being structured to affordably help small businesses with their cash flow processes and protect them from fraud. For example, remote deposit capture services can allow you to deposit checks to your business checking account from your desk and are designed and priced for businesses with a lower volume of checks.

Whatever services you need, the goal of the relationship manager is to help you identify and enact financial solutions that will help your business prosper today and tomorrow. Small business owners are busy juggling numerous responsibilities, and it’s valuable to have a steward that understands your business and can provide the tools necessary to make the right
decisions.

Gary Wright is a senior vice president, small business banking executive, at Cadence Bank. Reach him at (713) 871-3970 or [email protected]

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